Experts Sing the Praises of Dividend Stocks

Wednesday, 22 Jan 2014 09:05 AM

By Dan Weil

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Many dividend stocks have been stellar performers in the five-year bull market, and numerous experts recommend them as a core holding for investors.

The S&P 500 Dividend Aristocrats index, which contains companies that have raised their dividends for at least 25 straight years, has gained 26 percent during the last year, almost matching the 26.8 percent gain of the Standard & Poor's 500 Index.

"There is a secular change taking place in that baby boomers who are retiring know they still need to own equities for capital appreciation," Josh Peters, equities strategist for Morningstar, tells CNBC.

Editor’s Note:
38 Trades That Could Turn $1,000 Into $49,000

"Dividend-paying stocks become very important not just because they generate income but because most are defensive plays, such as consumer staples, utilities and telecommunications, so there's less risk to earnings in an economic slowdown."

Bill Staton of Staton Financial Advisors in Charlotte, N.C., says you'll do well if you stick with companies that regularly boost their dividend, such as Boeing, Johnson & Johnson and Pfizer.

"A good rule of thumb is to look for companies that have paid a higher cash dividend for a minimum of 10 consecutive years," he tells CNBC.

Howard Silverblatt, senior index analyst with S&P Dow Jones Indices, is another dividend stock enthusiast.

"Dividends continue to be one of the few income-generating alternatives available to investors," he says in a statement. "Interest rates have risen significantly, . . . but are still historically low, with alternative income-producing instruments also low."

Net U.S. dividend increases totaled $56.7 billion in 2013, according S&P Dow Jones, and Silverblatt expects another strong year of gains in 2014.

Editor’s Note: 38 Trades That Could Turn $1,000 Into $49,000

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